When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Tech Alert - PayPal Holdings, Inc. (PYPL) - BUY
BUY PayPal Holdings, Inc. (PYPL) March 2020 $110-$115 in-the-money vertical BULL call spread at $4.35
Opening Trade
2-20-2020
expiration date: March 20, 2020
Portfolio weighting: 10%
Number of Contracts = 23 contracts
Massive down day as the Nasdaq dropped off a cliff – traders taking profits.
There has been no bad news on PayPal today whatsoever.
Markets are extremely volatile and it's important to use limit orders as option prices are whipping around.
PayPal is one of my favorite fintech companies and they should be one of yours too.
They are masters at trotting out 20% growth on almost every quarterly earnings report and have growth drivers such as Venmo.
The elevated implied volatility finally gives us a little bit of cushion on this call spread.
The risk – reward to this trade is quite favorable.
If you don’t do options, buy and hold.
Here are the specific trades you need to execute this position:
Buy 23 March 2020 (PYPL) $110 call at………….………$11.92
Sell short 23 March 2020 (PYPL) $115 call at…….…….$7.57
Net Cost:…………………................…..…….………..…….....$4.35
Potential Profit: $5 - $4.35 = $.65
(23 X 100 X $.65) = $1,495 or 14.95% in 29 days
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Spread” by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
